On visit to the Shanghai Expo, President Mahmoud Ahmadinejad alluded to 'pressure and intimidation' that China may have felt in the Iran sanctions vote. China, the largest customer of Iran oil, is treading carefully in the Middle East.

Iranian President Mahmoud Ahmadinejad, right, is shown the way by Chinese official Yu Zhengsheng after a flag raising ceremony during his visit to the Shanghai World Expo in Shanghai, China, Friday, June 11, 2010. Ahmadinejad has been polite in remarks about China, considering their support of new UN sanctions against Iran.

Officials here have insisted repeatedly in recent days that no senior government leader would meet Mr. Ahmadinejad, who inspected the Iranian pavilion at the Expo.

China’s vote in favor of sanctions have put fresh strains on its traditionally friendly relations with Tehran. Iran’s top nuclear official lashed out at Beijing Thursday, warning that “China is gradually losing its respectable position in the Islamic world.” But Ahmadinejad was polite in Shanghai.

"We have very good relations with China and we have no reason to weaken our relations with China.... The problem is the United States," said Ahmadinejad, who said Security Council countries had been subject to pressure and intimidation, according to the Associated Press.

China's delicate dance in the Mideast

The sanctions vote was another step in China’s delicate dance to strike a balance between its various political and economic interests in the Middle East, analysts here say.

China is a big customer for Iranian oil and a major investor in Iran’s energy sector, but Beijing is anxious not to alienate Tehran’s rivals in the Arab world. However, policymakers here had also feared a Chinese veto of the Western-backed sanctions resolution would have added another irritant to relations with Washington.

Foreign Ministry spokesman Qin Gang tried to placate Iran after the UN Security Council meeting, saying, “China attaches great importance to relations with Iran” and adding that “bilateral ties are not only in the interests of both nations, but also in the interests of regional peace, stability, and development.”

Why China, a friend of Iran, doesn't want it to get the bomb

Chinese experts on the Middle East say their government’s overriding priority in the Middle East is to stay friends with as many countries as possible and to ensure stability.

China objects to Iran’s suspected nuclear weapons program not just because Beijing is opposed to nuclear proliferation, but because it threatens an arms race, says Yin Gang, an analyst with the Chinese Academy of Social Sciences.

“If Iran had a nuclear deterrent, other countries in the region would seek a new balance and seek to follow suit," says Professor Yin. “Iran cannot be allowed to have its own bomb or there would be a big war in the Middle East.”

Though China agreed in 1992 to build a nuclear reactor for Tehran, it canceled the deal a few years later under US and Israeli pressure. “We were the first to be cautious about Iran’s nuclear program,” Yin points out, while Russia went ahead with the Bushehr reactor.

Sanctions don't bar China from buying Iran oil

At the same time, Chinese diplomats ensured that Wednesday’s UN resolution did not restrict foreign investment in Iran’s oil and gas industry, as Western nations had originally proposed. Oil exports are the primary source of revenue for Iran's government.

Beijing argued that the sanctions should focus on the target of international concerns – Iran’s nuclear program – and worried that damage to Iran’s energy sector would hurt the economy in ways that would make ordinary Iranians suffer.

They appeared to have more self-interested motives, too. Besides importing 11 percent of its oil from Iran in 2009, China is the largest foreign investor in Iran’s oil and gas fields, partly filling a vacuum left by Western firms.

US oil companies are forbidden by US law to invest in Iran, and European firms such as Norway’s Statoil and Italy’s ENI “are lukewarm because of political pressure” from their governments says Valerie Marcel, an energy analyst with the London-based Chatham House think tank.

Why Iran appreciates China's business

China’s continued willingness to develop new fields “is a symbolic show of support of great significance,” says Dr. Marcel. When under US pressure Japan backed off a deal to explore Yadavaran, one of Iran’s largest oil fields, in 2007, “Iran was very relieved” that the largest Chinese state-owned company, Sinopec, stepped in to the deal," she says.

Another state-owned giant, China National Petroleum Corp., took over the lead in a $4.7 billion deal to develop the South Pars field earlier this year after the French firm Total dragged its feet in negotiations.

These government-to-government deals, however, are subject to approval by the Chinese authorities, who may yet get cold feet, suggests Yin, with the Chinese Academy of Social Sciences.

“The government has restrained investment in Iran’s oil industry for fear that if we are the only country investing during sanctions, it might damage our international image and our reputation among Arab countries,” he says. “China will undoubtedly have to pay closer and closer attention to the risks attached to investment in Iran’s energy sector.”